Week Ending 29 Sept 2019
Notes for last week.
From what I can tell, the following things were important last week:
debt continues to grow in the USA. Consumer borrowing much more mortgage debt. This produced a corresponding jump in assets, or at least asset values.
Trump talked about excluding China from US capital markets and then immediately backpedalled,
We Work shown to be a total scam, with Adam Neumann's wife wandering around the HQ sacking employees at random for having a 'bad aura'. I am not alone in wondering whether this will result in other similar companies being rumbled for what they are. This post by Prof Galloway hits the nail on the head,
Brexit lurches on, showing that when politicians disagree with voters it's usually the politicians that win.
Repo market looks rattled. Supposedly, suddenly there is an excess of bonds available because of UST issuance and slowing down of Fed QE purchases. Fed may be moving to a corridor system again. Not sure what this really means. I'd like to think it means dropping yields, but with all economies slowing, maybe not. Supposedly, the Fed has to but up more and more of banks long-dated assets to create more reserves and liquidity in the banking sector. Are depositors distrustful of weak banks again?
There seems a collapse of total return from real estate companies. Presumably, these bond-like equities have been swept up in the collapse in yield we've seen this year.
The Credit Bubble Bulletin writes in this post:
I view the “repo” market expansion as indicative of overall speculative leverage. The rapid growth of Bank and Broker/Dealer debt securities holdings is symptomatic of speculative excess and likely associated with derivative-related trading activities. To simplistically connect the dots, the expansion of “repo” securities Credit along with ballooning Bank and Broker/Dealer securities holdings generate the liquidity abundance and speculative impulses for a general inflation of securities market prices (debt and equities). The inflation of perceived wealth then feeds into the real economy through strong consumer and business spending.
Drone attacks on Saudi production facilities seem not to have had a big impact on commodity prices.